Gold and silver rally after a two-session drop: Why the memelike moves are so unusual

By Myra P. Saefong and Steve Goldstein

Gold has lost its reputation as 'a boring, low-risk safe-haven asset' - for now

Gold futures finished higher on Tuesday after two days of selling.

Gold and silver settled higher for the first time in two sessions on Tuesday after last week's record-setting shakeout, with the dollar-denominated precious metals finding support, for now, from weakness in the U.S. dollar.

Some analysts, however, warn that moves in both metals to recover some recent losses are "fragile," and others questioned why strength in haven gold has come despite signs of a recovery in risk appetite.

"It is true that the U.S. dollar's retreat from its recent peaks, after failing to sustain its recovery momentum from a four-year low, provided gold with a short-term breather and attracted some buyers," said Rania Gule, senior market analyst at XS.com. In Tuesday dealings, the ICE U.S. Dollar Index DXY edged down by 0.2% to 97.42 after strengthening over the past two trading sessions.

Gule sees this support as "still fragile," because it is not based on a fundamental shift in monetary policy or the global risk landscape. Support has come from a "temporary pause in the dollar's strength rather than sustained weakness," she said in market commentary.

After tallying a loss of 13% over the past two trading sessions, the most-active April gold contract (GC00) (GCJ26) climbed by $282.40, or 6.1%, to settle at $4,935 an ounce on Comex. It notched its best one-day gain since March 19, 2009, according to Dow Jones Market Data.

Read: Silver plunges into a bear market for the first time since 2022. Here's how long it may last.

Silver (SI00) (SIH26) led the gains among precious metals, tacking on 8.2%, or $6.29, to settle at $83.30 an ounce following a two-session drop of about 33%.

What's particularly unusual about the move higher in precious metals is that it has come even as risk appetite in the market appears to be recovering, said Ipek Ozkardeskaya, senior analyst at Swissquote.

Korea's KOSPI Composite Index KR:180721 was up 6.8%, Japan's Nikkei 225 Index JP:NIK reached a new high on Tuesday. The U.S., the Dow Jones Industrial Average DJIA closed higher Monday, though traded lower in Tuesday dealings.

"Gold's latest behaviour is a concern," Ozkardeskaya wrote in a market note. "Traditionally, gold acts as protection against market risk. But it is now behaving like a risky asset - worse, at times like a meme stock - and its negative correlation with risk assets has faded."

She largely attributed this "unusual" behaviour to "highly speculative, leveraged positioning."

The problem is that most diversified portfolios have exposure to gold, so "this volatility affects all risk profiles," Ozkardeskaya said. "That is disquieting."

It will be interesting to see whether the recent slump in prices helps temper gold's memelike symptoms and "restores its reputation as a boring, low-risk safe-haven asset. Because today, that description no longer fits," she said.

Related: During the worst day for gold in 46 years, options traders made bets the metal could hit $20,000

-Myra P. Saefong -Steve Goldstein

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02-03-26 1413ET